LORD Fraser of Carmyllie was last night facing fresh embarrassment about his business affairs after an auditor raised concerns over the accounts of a four-star golf hotel of which he is a director.

Less than two months before Lord Fraser is expected to deliver his verdict on the Scottish Parliament building fiasco, the auditor of the debt-laden Carnoustie Golf Course Hotel & Resort has qualified the company's accounts because the directors failed to provide an updated valuation of the property.

They stuck with a four-year-old estimate of the hotel's worth, at (pounds) 14m, yet the events of September 11, 2001, have radically altered the Scottish tourism market. Before 2000, the hotel had been rated at (pounds) 7.5m.

This qualified audit opinion, a rare occurrence in the corporate world, is expected to be a setback for Lord Fraser, a former lord advocate, and

Michael Johnston, the property developer behind the

Carnoustie hotel.

Findlay & Company, the auditor, also highlights, under the heading ''going concern'', the ''uncertainty as to the continuation and renewal of the company's borrowing facilities''.

The accounts, filed last week with Companies House nearly six months late, could also raise a new question-mark over Carnoustie's selection for the 2007 Open, given the prestigious hotel was an important factor in the championship returning to the Angus course.

Last month, Lord Fraser warned the public not to invest with another businessman with whom he had become

involved.

After meeting Michael Campbell at the New Club in Edinburgh, Lord Fraser invested (pounds) 5000 in a proposal by his company, Playcastle (Scotland), to build a hall of fame in a football-shaped building near Bourget Airport en route to Disneyland, Paris. However, Mr Campbell had been sequestrated in June over a (pounds) 1900 debt for a rifle, and Lord Fraser told The Herald he had been appalled to discover Mr Campbell had purported to use a Playcastle cheque for the acquisition of personal jewellery and a cash advance.

Lord Fraser was unavailable for comment yesterday.

In the accounts, one of the options being explored by the hotel and resort for ''ongoing operation of the hotel'' is for its sale to pay off debt.

The company's accounts for the year to March 31, 2003 reveal a jump in its annual losses from (pounds) 1.14m to (pounds) 1.24m, taking accumulated losses to (pounds) 5.19m.

Its bank overdraft rose from (pounds) 9.31m to (pounds) 10.3m, and net debt increased from (pounds) 9.36m to (pounds) 10.3m during the 12 months. Shareholders' funds fell from (pounds) 3.23m to (pounds) 1.99m, a figure which highlights the importance of the hotel's valuation to the company's overall balance sheet.

In its report, Findlay & Company says: ''The evidence available to us was limited because the company's directors did not obtain an updated valuation of the revalued fixed assets of the company as required by FRS (Financial Reporting Standard) 15. There were no other satisfactory audit procedures that we could adopt to confirm that the carrying amount of the revalued fixed assets at the balance sheet date was their current value.''

The accounts state freehold property with an original cost of (pounds) 7.59m was revalued on March 21, 2000 by external valuer, Jones Lang LaSalle Hotels, on an open market basis, at (pounds) 14m. This valuation preceded the 9/11 attacks, which Carnoustie Golf Course Hotel & Resort blames partly for its financial troubles.

The company says in the accounts: ''The company has operated in a marketplace that is still recovering from the terrorist attack in the United States in September 2001. The directors are hopeful that, with the passage of time, trading conditions will improve.''

Its borrowing facilities with Bank of Scotland fell due to be reviewed at the end of May, but the company says in its accounts that ''formalisation of the facility has yet to occur''. A bank spokeswoman said: ''We remain supportive of the company.''

Even if a buyer were found, there could be restrictions because of an inhibition order on the hotel obtained in the Court of Session by former associates of Mr Johnston who are suing for about (pounds) 2m in relation to the development.

The architect, builder, and interior designer all started court action to obtain settlement of bills.

Next Friday, Mr Johnston goes to trial accused of keeping a shotgun at the hotel in April last year and failing to comply with the conditions of his shotgun certificate.

Mr Johnston could not be contacted yesterday. He frequently travels to South Africa on business.